Supreme Court's New PF Rule: How Are You Adjusting Your CTC Structure?

I am Juned Lakdawala, and I am working as an HR executive. Currently, the Supreme Court has enforced that PF will be deductible on every head except HRA. Can anyone help me to create a structure for CTC according to the Supreme Court amendment?

The Supreme Court never mentioned the CTC in their judgment. They focused on the inclusion of 'special allowance' as part of the monthly salary. This allowance is paid regularly and is common for all employees. The court concluded that this special allowance is essentially salary or allowance disguised to avoid EPF contributions. They also examined other similar allowances for this purpose. Therefore, it is advisable to rely only on what is stated in the judgment rather than relying on hearsay information.

Thank you.

There is no clarity with respect to the effective date in the judgment as it relates to an appeal on the RPFC's action. As for applying the judgment to other employers, we will need to monitor the situation closely. Once developments are known to everyone, necessary action will be taken.

Interpretation of Wages/Salary Under the EPF Act

So far as I am able to understand, the judgment of the Honorable Supreme Court of India in this case is an exercise of interpretation of the term wages/salary in the backdrop of the definition of the same under the EPF Act with reference to contribution envisaged under Section 6 of the Act. As such, the judgment is only declaratory in nature.

All along, the contributions paid on the basis of a certain different understanding ever since the coming into effect of the Act have been accepted by the EPF Authorities. The practical difficulties of tracing back documents and the collection of arrears from the employees, the reassessment of settled final claims, and the like would be the insurmountable impediments in the aspect of giving retrospective effect to the interpretation.

Therefore, prospective implementation based on the ratio decidendi of the judgment would be the positive action in the interests of the EPFO, employers, and the employees concerned.